A Privacy Capitalist Wins Big After Snowden

Mike Janke is the chief executive officer of Silent Circle, a company that sells privacy devices and apps.

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Originally published on June 5, 2014 5:58 pm

A year ago this week, the NSA electronic spying revelations by Edward Snowden began to shake the high-tech industry in a big way. The scandal has hurt some companies, but there are also some tech winners, including an American who has been cashing in on the political hype.

Meet Mike Janke: privacy capitalist.

Janke isn't the 20-something, hoodie-wearing bro-grammer we hear so much about. He is 46 years old, with life experience.

"I spent the better part of 15 years playing with every type of plastic explosive you could deal with and blowing stuff up all over the world," says Janke, a former Navy SEAL.

When he left the military and started a private logistics company, foreign governments became his clients — and they gave him intel.

"When the EU tells me, 'Please stop your people from using Skype,' back in 2008, you gotta listen," Janke says. "I would say, 'Why?' and they'd say, 'It's not secure.' "

As we now know, Skype, the Microsoft service, was used for NSA surveillance. Back when Janke got that tip, he got a business idea: His clients would happily pay for secure calls, emails and texts. They'd even tell him, "If you find something, let us know."

One year before the Snowden revelations, Janke put together a team of men — all men — who were obsessed with encryption. It included Phil Zimmermann, a cryptographer who was the subject of a federal criminal investigation, later dropped, for exporting powerful code to other countries. Their startup is called Silent Circle. Janke is the CEO, and when the Snowden leaks happened, interest in Silent Circle soared.

"I have found that luck plays absolutely no part in it," Janke says. "Timing does."

He's been moving at warp speed ever since. Janke is on planes way more than he's in his office in the Washington, D.C., area. The company is about to ship out a new device, a smartphone with military-grade privacy for the everyday customer. (We covered its launch.)

His desk is full of these Blackphones, as well as competitors' phones. When he gets a call, the prototypes he's testing all ring in one big cacophony. "It can be maddening," he says.

New And Old Money

A new generation of startup entrepreneurs is building their businesses on top of Janke's efforts. Ethan Oberman, founder of San Francisco-based SpiderOak, makes privacy-friendly apps for Janke's smartphone.

"Are 2 billion people going to buy the phone? Not out the gate," Oberman says. "But I think we are at the cusp of winning."

Oberman is speaking in the royal "we." A year ago, Silicon Valley didn't fund that kind of app. Now, venture capitalists know how to spell the word encryption, Oberman jokes. He's doing so well that he can afford his own big garage office and hosts like-minded friends for cold beers on a Friday afternoon.

This new capital is fueling a vision that defies the current app economy, Oberman says. "All the stuff we're doing now is about creating a world where the server never actually ever knows what data it's storing, under any circumstances," he says.

As for Janke, he's making the privacy industry appealing for old money, too.

Oil and real estate tycoon Ross Perot Jr. is now an investor in Janke's startup. Even though the business makes it harder for the U.S. government to do national security work, and Perot's dad ran for president, he says it's not unpatriotic.

"If there was an issue and the U.S. didn't want us to do it, didn't want us to be in business, we'd have been told," Perot says. "We haven't been told that."

Off To Europe

Janke's company is moving its headquarters to Switzerland, where privacy rules are stringent and data vaults are a lot like bank accounts: no questions asked.

His clientele is an eclectic mix that includes the U.S. government, small governments like Vietnam and Laos, journalists hiding their location in Syria, human rights activists in Egypt, and European telecoms.

"We're a client because I have ... [an] entire C-suite, that I think their communication should be private," says Jaya Baloo, who heads data security at KPN, a Dutch telecom company.

"That's really important," Baloo says, "and that would have been important regardless of the Snowden revelations."

Back in Washington, Janke is building a bigger office. He says his company is now worth $2 billion. It's not quite ready to go public, but grew four times its value from last year. He's hiring a lot.

With all the running around, he hadn't bothered to check out his new view. He walks over to the window and raises the blinds.

"Ah, there's a Ferris wheel," Janke says. "That's pretty nice."

He lets out a little smile. The ride he's on moves a lot faster.

Copyright 2014 NPR. To see more, visit http://www.npr.org/.

Transcript

AUDIE CORNISH, HOST:

Snowden's leaks have shaken the high-tech industry in a big way. This morning, we heard how trust in the company Cisco took a hit. But there are tech winners that have come out of all of this, too. NPR's Aarti Shahani reports on one of them, an American privacy capitalist who is cashing in on the political hype.

AARTI SHAHANI, BYLINE: Mike Janke is not the 20-something-year-old brogrammer we've heard so much about. He is 46 with life experience.

MIKE JANKE: I spent, you know, the better part of 15 years playing with every type of plastic explosive you could deal with and blowing stuff up all over the world.

SHAHANI: Janke was a Navy Seal. When he left the military and started a private logistics company, foreign governments became his clients. And they gave him intel.

JANKE: When the E.U. tells me, please stop your people from using Skype, back in 2008, you've got to listen. And I would say, why? And they would say, it's not secure.

SHAHANI: As we all know now, the Microsoft service was used for NSA surveillance. Back when Janke got that tip, he realized his clients would happily pay for secure calls and e-mails and texts. They'd even tell him...

JANKE: If you find something, let us know.

SHAHANI: And so one year before Snowden, Janke put together a team of men - all men - who were obsessed with encryption. Their startup is called Silent Circle. Janke is the CEO. And when the Snowden leaks happened, in one shotgun blast, Silent Circle blew up.

JANKE: I have found that luck plays absolutely no part in it - timing does.

SHAHANI: Janke has been moving at warp speed ever since, on planes way more than he's in this Washington D.C. office. They're about to ship out a new device - a smartphone with military-grade privacy for the everyday customer. We covered its launch. His desk is full of these phones and the competitors'. He's testing prototypes. And when he gets a call...

JANKE: There you go. Here's one, two...

SHAHANI: They all ring.

JANKE: Three, four of them are ringing right now.

ETHAN OBERMAN: Are 2 billion people going to buy the phone? Not out the gate. But I think we are at the cusp of winning.

SHAHANI: Ethan Oberman is speaking in the royal we. He's got a startup in San Francisco that makes apps for Janke's smartphone - privacy friendly apps. A year ago, Silicon Valley didn't fund that kind of app. Now venture capitalists know how to spell the word encryption. They see it on Twitter.

OBERMAN: All the stuff we're doing now is about creating a world where the server never actually ever knows what data it's storing - under any circumstance.

SHAHANI: Oberman is doing so well, he can afford his own big garage office, and can host like-minded friends for cold beers on a Friday afternoon. Janke's company is making the privacy industry appealing to old money, too.

ROSS PEROT: It really dawned on me. I said, you know, this is quite a product in the right time of this market cycle.

SHAHANI: Ross Perot, Jr. is a Texan - an oil and real estate tycoon whose dad ran for president. He's now an investor in Janke's startup. And even though the business makes it harder for the U.S. government to do national security work, Perot says it's not unpatriotic.

PEROT: If there was an issue, and the U.S. government didn't want us to do it and didn't want us to be in business, we'd have been told. And we have not been told that.

SHAHANI: Janke's company is moving its headquarters to Switzerland, where data vaults are a lot like bank accounts - no questions asked. His clientele is a truly eclectic mix that includes the U.S. government, tiny governments like Vietnam and Laos, journalists hiding their location in Syria, human rights activists in Egypt and European telecoms - take KPN, the AT&T of the Netherlands.

JAYA BALOO: We're a client because I have executives. I just have an entire C-suite that I think their communications should be private.

SHAHANI: Jaya Baloo heads data security. And when KPN was the target of a not-so-friendly attempted takeover, she needed to protect her executives in high-stakes negotiations.

BALOO: In business - because it is business - that's really important. And that would've been important regardless of the Snowden revelations.

SHAHANI: Back in the U.S. capital, Mike Janke is building a bigger office. He says his company is now worth $2 billion - not quite ready to go public, but hiring a lot. And Janke is drinking a lot of coffee.

JANKE: At my age you have to, right? Chemically augmented performance.

SHAHANI: With all the running around, he hadn't bothered to check out the new view. He walks over to the window and raises the blinds.